Probate Even When There’s a Trust

funding a trust
Trusts aren’t magical – it takes some work to make sure they work properly.

I came across this article the other day and thought it was worth sharing and discussing because the situation comes up A LOT!

Here’s the beginning of the article:

Dear Len & Rosie,

Mother died and my sisters and I are her co-executors and co-trustees. We were told by the bank that we are unable to open an estate account to access any of her funds unless we put the estate in probate. Why did we have to have a trust if the estate still has to go through probate? When my mother made her trust she was assured that there would be no probate and that she wouldn’t put her children through what she went through when my father died. Are there any banks that will honor the will and trust as she made them?

I don’t want to ask her attorney because it costs so much. Where are my civil liberties if no matter what mother wanted done with her hard earned money, the court gets to make the final ruling? Why are lawyers telling people to set up living wills and trusts if they do not protect our personal rights?

Mimi

The lawyers in the article discuss CA law, not FL law, so disregard any specifics they gave. FL probate laws are very different – if you die with more than $10,000 in your individual name, your estate will likely need to go through the probate process.

But Mimi’s letter shows the confusion that arises when the assets of someone who spent the time and money to create a trust end up in probate. As the lawyers said, we don’t know what was said between Mom and her lawyer. We don’t know what kind of trust she had – was it a cheap 8-page boilerplate trust that a paralegal prepared after a 15-minute conversation with Mom, or a 90-page custom trust that a lawyer spent hours creating just for Mom? Did the lawyer explain the importance of funding the trust (retitling all assets into the name of the trust)? Did Mom think Dad was going to take care of that, but he didn’t? Did Mom understand what she was supposed to do?

Who knows.

The lesson to be learned is that if Mimi had sat down with Mom and her estate planning or elder law attorney, this issue could have been discovered and corrected before Mom died.

As with most everything in life, if you’re not being proactive, you’re going to be forced to be reactive.

Other articles you may find interesting:

Shorter Isn’t Always Better

Why Would I Need a Durable Power of Attorney?

Ready to make sure everything’s in order for your loved ones in the event you become incapacitated or die? Give Manasota Elder Law a call at 941-444-5958. We’ll help you determine whether you’re all set, or whether there are still some things that need to be done to protect what’s most important to you … your family.

Don’t Wait Until it’s Too Late

In this video, Cindy discusses why you should regularly review your estate planning documents. You may discover you don’t have what you think you do.

Other articles/videos you may find interesting:

Gun Trusts Are Not a Shield

Don’t Put Money into Property You Don’t Own

Ready to make sure everything’s in order for your loved ones in the event you become incapacitated or die? Give Manasota Elder Law a call at 941-444-5958. We’ll help you determine whether you’re all set, or whether there are still some things that need to be done to protect what’s most important to you … your family.

How Much Money Is Needed for Long-Term Care?

long term care
Planning for long-term care expenses now can save you and your loved ones a lot of stress later on.

You probably know that health care is a big expense for retirees. Research shows that 70% of seniors aged 65+ will require some type of long-term care in their lifetime. This could be as little as a couple of visits a week from a home health aide to years in a nursing home. If you don’t plan ahead, these expenses could easily  bankrupt you.

Motley Fool’s January 2020 article (which is still relevant a year later!) entitled “The Shocking Cost of Long-Term Care — and How to Tackle It” says that another thing you probably know — or should know —is that YOU’RE footing the bill for long-term care. It’s not covered by Medicare. Medicare will only pay for medical-related services, like those needed to help you recover from an injury, illness, or procedure. Therefore, if you’re admitted to the hospital and then need a few weeks at a skilled nursing facility to finish your recuperation, Medicare will usually pay for that short stay. However, if you need help getting dressed in the morning due to chronic conditions or merely your advancing years, are bedridden, or will need to move permanently into a nursing home, it’s not covered. You’ll have to pay for that care yourself.

Let’s look at the average annual cost nationwide of what some common services will cost you, based on 2019 data from Genworth:

  • Assisted living facility: $48,612
  • Home health aide: $52,624
  • Shared nursing home room: $90,155
  • Private nursing home room: $102,200

Remember that these are just averages, and in some parts of the country, you’ll pay much more. You can, therefore, see why it’s critical to have a plan in place for covering long-term care costs in your senior years, before that expense hits you.

You have a few choices for addressing the major expense of long-term care. One is that you can add to your retirement savings as much as possible. IRA contribution limits for 2021 max out at $6,000 a year for workers under 50, and $7,000 a year for those 50 and over. With a 401(k), you get even more flexibility to fund your savings. Workers under 50 can deposit up to $19,500 annually, and if you’re 50 and over, you can go up to $26,000. The more money you add to your savings while you’re working, the more funds you’ll have available in case you need to pay for long-term care when you retire.

Another option is to contribute to a health savings account, or HSA, and carry unused funds into retirement. You can then take withdrawals to pay for long-term care. Annual HSA contributions for 2021 max out at $3,600 a year for those who save on their own behalf, or $7,200 for those saving on behalf of a family. Workers 55 and older get an additional $1,000 per year to contribute. HSA funds never expire, so these accounts are a very effective way to save for future healthcare costs, like long-term care, in a tax-efficient manner.

Finally, you can buy a long-term care insurance policy which will pay for a big part of your costs when you have large bills. Very few insurance companies offer pure long-term care insurance any more – and even fewer people want to pay those premiums. Most people today are opting for life insurance or annuities with long-term care riders. Optimally, you should apply for long-term care insurance in your 50s, but many seniors get approved in their 60s. You can use funds from your HSA to pay for them.

Long-term care is an expense many seniors will have to address. If you want to avoid a situation where you’re forced into severe financial times, talk with your financial advisor today. Plan now to give you, and the people who care about you the most, less to worry about in the future.

Preparing to Meet with an Estate Planning Attorney

In this video, Cindy discusses how to prepare before meeting with an estate planning attorney, so your time is used effectively.

Other articles/videos you may find interesting:

Co-Owning Real Estate: The Good, the Bad, and the Ugly

Deciding Who to Name as Your Personal Representative

***Want to learn more about how to protect your family from the government, lawsuits, accidental disinheritance, or nursing homes? Click THIS LINK to book a seat at one of our upcoming fun and educational workshops.***

Beware of COVID-19 Vaccine Scams

COVID-19 scams are everywhere.
Beware of scammers promising early access to COVID-19 vaccines.

Fear has a way of making people do things they wouldn’t ordinarily do.

The COVID-19 panic has resulted in a spate of scams exploiting and targeting the fearful – especially older Americans. First it was white-jacketed people knocking on doors promising delivery of COVID test kits. Now we’ll likely see people promising the undereducated, the isolated, and the unwary early delivery of the COVID vaccine – for a small fee, of course. Or perhaps they’ll just ask for a bit of personal information, such as your date of birth, social security number, etc. You know – to “verify” your identity or eligibility for this special deal.

This article is from a TX news outlet, but the advice applies to everyone:

  • Research carefully,
  • Check with your doctor,
  • Ignore calls for immediate action, and
  • Double-check the link (hover over it to see the address) before opening it.

Additionally, report any suspected scams to family members, neighborhood social media pages, and your state Attorney General.

Other articles you may find interesting:

Everything You Eat, Drink, Do, Don’t Do, and Are May or May Not Cause Dementia

Simple Safety Tips for Seniors

***Want to learn more about how to protect your family from the government, lawsuits, accidental disinheritance, or nursing homes? Click THIS LINK to book a seat at one of our upcoming fun and educational workshops.***

What’s a Restatement of a Trust?

Restatement vs. amendment
Changing the terms of a revocable trust agreement is known as “amending” the trust. A restatement is essentially a complete amendment of your trust.

Many people opt to include revocable living trusts as part of their estate plan. They have many benefits, including probate avoidance, ease of administration when you become incapacitated or die, protection for surviving spouses and children, and privacy. But another plus is that they can be changed whenever you want!

Changing the terms of a revocable trust agreement is known as “amending” the trust. The document you’ll execute will generally be titled something like “First Amendment to the Smith Family Trust,” and may be as little as one or two pages long. An amendment is generally appropriate when you’re only making one or two minor changes to your trust – perhaps changing your successor trustees, or adding a beneficiary. The amendment acts as a patch to your trust; the trustees and beneficiaries must read the original trust agreement, and then understand how the changes made in the amendment affect the original trust agreement. Both documents must be kept as long as the trust is in effect.

But if you want to make more extensive changes to your trust – such as changing the way beneficiaries receive their inheritance, removing beneficiaries, adding a corporate trustee, and changing what state law guides the trust, “restating” your trust may be more appropriate. A restatement is essentially a complete amendment of your trust. Basically, you’re keeping the framework – the trust’s name, original date, and original Grantors (trustmakers) – but ripping out the guts and re-writing the trust the way you want it now. The document you’ll execute will generally be titled something like “Restatement of the Smith Family Trust,” and will be many pages long (if you have a good trust). The old trust agreement is discarded and completely replaced with the restatement.

If you’ve accumulated a collection of amendments to your trust, there’s a very good chance your trust won’t do what you think it’ll do when you die. If you think of each amendment as a patch, each patch provides an opportunity for your trust to “leak,” or result in ambiguity (confusion). Ambiguity and confusion leads to arguments and lawyers. Or, perhaps you wouldn’t like your children or grandchildren to see all the changes you made to their inheritances over the years.  At your death, your beneficiaries are entitled to a copy of your trust and all amendments. A restatement can solve those problems because now there’s just one recent document to read and understand – not two or more spanning decades of changes.

What about cost? As usual, that varies. Amendments are usually very customized and require actual typing from scratch, so they’re very time-consuming. Time = $$$ in the legal world. Restatements can be drafted fairly quickly and easily with specialized legal software – especially if the attorney drafted the original trust with that same software. So, like most estate planning work, the cost will likely depend on your situation.

But now, when you’re ready to make some changes to your revocable living trust, you’ll have a better idea of what your estate planning attorney is talking about when he or she discusses amendments and restatements.

Other articles you may find interesting:

What is an ABLE Account?

Naming a Family Member as Successor Trustee: Pros & Cons

***Want to learn more about how to protect your family from the government, lawsuits, accidental disinheritance, or nursing homes? Click THIS LINK to book a seat at one of our upcoming fun and educational workshops.***

How Can I Move On after a Loved One Dies?

Grieving has no time limit. But sometimes doing tasks can help you move through the grieving process.

There are no rules about when you should “get back to normal” or “move on” after a loved one dies. Everyone deals with grief differently. But there are many financial and legal tasks that will require your immediate attention, and sometimes dealing with menial tasks can help you move through the grieving process.

Here are some things that will need to be done:

  • Gather important information, such as the deceased’s Social Security number, birth certificate, marriage certificate, divorce decree, and military discharge papers.
  • Locate the deceased person’s original “wet-ink” Will (and Trust, if applicable).
  • Obtain at least 10 copies of the death certificate. In Florida, we have both short-form (no cause of death listed) and long-form death certificates. Generally, only life insurance companies require the long-forms in case there’s a suicide, workplace death, or something else that voids the policy. Everyone else will require a short-form due to privacy laws. So, request a long-form for each life insurance policy and lots of short-forms for everything else.
  • Inform the Social Security office about the death (if the funeral home didn’t) and file a Social Security benefits claim form to qualify for the death benefit. Surviving spouses will also want to find out what will happen to their benefits due to the death of their spouse.
  • Notify the deceased person’s supplemental Medicare insurance plan of the death of the insured (Social Security will notify Medicare and Florida Medicaid, but not any supplemental health insurance companies).
  • Find the titles and registrations for all automobiles. If there’s a loan, find the loan documents. If leased, find the lease contract.
  • Print out up-to-date statements for all bank, brokerage and retirement accounts.
  • Find all evidence of debts and their balances – loans, credit cards, mortgages, medical bills, etc.
  • Find the beneficiary forms for all insurance policies, IRAs, 401(k)s, bank accounts, annuities, and investment accounts.
  • Deposit the deceased’s original Will (if there is one) with the Probate Court in the county of the deceased person’s residence, even if no probate is expected. Make a copy first because the clerk will keep the original. In Florida, there’s generally no charge to deposit a Will.
  • File a death claim with the deceased’s life insurance company, if applicable.
  • Request, complete, and submit paperwork for any accounts that named you as a beneficiary.
  • Contact the Employer’s Benefits department about survivorship pension, health insurance, unpaid salary and life insurance benefits, if applicable.
  • Change the name on the utilities, if applicable.
  • If the deceased person was a party to an ongoing lawsuit, or the beneficiary of a probate that hasn’t yet settled, gather all the pertinent paperwork.
  • Prepare a preliminary monthly budget and income summary.
  • Contact an experienced estate planning or probate attorney to determine whether a probate and/or trust administration will be needed. While trust administration is much less onerous than probate, Florida does have some legal requirements for trustees after a person dies.

Be aware that anyone convicted of a felony – anywhere, anytime – cannot serve as a Personal Representative (known as an Executor in other states) in a probate under Florida law.

Hold off for a bit before you retitle any joint accounts into your name only  – random checks made payable to the deceased can appear for a few weeks after death as things settle out and you’ll want to be able to deposit them.

Contact your financial advisor about transferring any inherited IRAs into your name and taking out a required minimum distribution (RMD), if applicable. New beneficiaries should also be named and title for any real estate previously held jointly with the deceased should be updated (your  estate planning attorney can assist you with that).

And don’t forget about taxes. A final income tax return may need to be filed, and if the deceased person was very wealthy, you may also need to file a federal estate tax return within nine months of death.

You don’t need to go it alone. Contact an experienced estate planning/estate administration lawyer for help.

Other articles you may find interesting: 

How Family Dysfunction Can Wreck Your Estate Plan

Why is This Probate Taking So Long?

***Want to learn more about how to protect your family from the government, lawsuits, accidental disinheritance, or nursing homes? Click THIS LINK to book a seat at one of our upcoming fun and educational workshops.***

Death Quest: The Morbid Scavenger Hunt

In this video, Cindy discusses the sad, frustrating process most people have to go through after a loved one dies.

Other articles/videos you may find interesting:

Bad Things Happen to Young People, Too

What Happens When a Beneficiary Form Doesn’t Match the Will or Trust?

***Want to learn more about how to protect your family from the government, lawsuits, accidental disinheritance, or nursing homes? Click THIS LINK to book a seat at one of our upcoming fun and educational workshops.***

Dying Alone and Forgotten

Dying, End-of-life
If you have no family members willing and able to help you when you need it most, you’ll have to rely on strangers.

This is a difficult article to write, but it’s too important not to. Nothing in this article is intended as criticism – it’s merely a fact-based look at what can happen when certain choice are made or circumstances happen.

We estate planning and elder law attorneys preach preparation all the time. “Make sure you have your legal documents in order,” “Let your kids know what you want,” “Simplify and organize your life to make things easier when you’re not around.” But, more and more often, I come across people who want to do these things, but hit a roadblock because they have no one they can rely on to help them if they become incapacitated or die.

In some cases, it’s due to circumstances beyond their control. Perhaps they couldn’t have children, or their spouse and children predeceased them. Perhaps they were a childless only child and have no siblings, nieces or nephews. Or maybe they’ve outlived their siblings and friends. Maybe their only child is a homeless drug addict.

In other cases, it’s due to choices they made during their lives. Many people are choose not to marry, and/or not to have children. Sometimes people become estranged from their family members or even disown their children for a multitude of reasons.

Whatever the cause, the result is the same – you will likely end up alone, with strangers handling your money and your health care decisions, and deciding how and where you’ll live.

When you have no family willing and able (physically and financially) to take on the responsibilities of caring for you if you become ill or suffer from dementia, and no one to administer your estate when you die, the government will find someone and pay them a certain amount of money per hour with your money. If you have no money, the state government will pay that person a very minimal fee. Unfortunately, because we’re in a very senior-dense area, most of these professional guardians have many people they’re paid to look after.

If you have some assets (generally $500,000 or more), you can take some steps now to prevent guardianship over your finances and maintain some professional control over your assets. Search for  “trust companies” in your area and start reaching out to them to find out how they work, what their fees are, etc. Your local bank or investment firm may also have a trust company you can look into.

Proactively finding someone to make your health care decisions is quite a bit harder. It’s such a personal thing. Trust companies, attorneys, banks, etc. won’t take on that responsibility. Search for “care manager” or “geriatric care manager” in your area and reach out to them. Some will allow you to name them or their firm in your legal documents, and others can help you find someone to name.

As you can see, none of these options are pleasant or optimal. If there’s any way to mend fences with children or other family members, please seriously consider doing so. Don’t choose to die alone and forgotten.

Other articles you may find interesting:

Long-Term Care: Plan Before It’s Too Late

Unique Veterans Benefits in Your State – 2020

Would you like to learn more about estate planning, elder law, asset protection planning, probate, and Medicaid planning in an informal, no-obligation setting?

To sign up for one of our free, educational workshops CLICK HERE.

Co-Owning Real Estate: The Good, the Bad, and the Ugly

In this video, Cindy discusses how co-ownership of real estate can affect your estate plan.

Other articles/videos you may find interesting:

Estate Planning for Same Sex Couples

What Happens if I Die Without a Will?

***Want to learn more about how to protect your family from the government, lawsuits, accidental disinheritance, or nursing homes? Click THIS LINK to book a seat at one of our upcoming fun and educational workshops.***